PUBLIC SERVICE COMMISSION CHARLESTON. CompIainants,

Transcription

1 PUBLIC SERVICE COMMISSION OF WEST VIRG'~NIA CHARLESTON,. Entered: June 30, ASE NO WS-C NEST VIRGINIA UTILITY CONTRACTORS A$SOCIATION, 3 corporation; and~contractors ASSOCIATION OF ljest VIRGINIA, a corporation, r. CompIainants, USON COUNTY PUBLIC SERVICE DISTRICT, 2 public utility; SISSONVILLE PUBLIC SERVICE 3ISTRICT, a public utility; and SOUTH PUTNAM PUBLIC SERVICE DISTRICT, a public utility, Defendants. HEARING EXAMINER'S DECISION PROCEDURE On November 19, 1982, the West Virginia Utility Contractors?&sociation, a corporation; and Contractors Association of West Virginia, 3 corporation (hereinafter Complainants or Associations), Charleston, Xanawha County, filed a formal complaint, duly verified, against Mason Zoounty Public Service District, a public utility; Sissonville Public Service District, a public utility; and Teays Valley Public Service District (now officially known as South Putnam Public Service District), a public utility (hereinafter Defendant, District, PSD). or By order entered November 19, 1982, the Commission ordered that the aforesaid Defendants satisfy said complaint or make answer thereto, in uriting, within ten (10) days of the service upon them by Certified Mail Df a copy of said complaint and a copy of the Commission's order. On November 29, 1982, November 30, 1982, and December 1, 1982,- the Defendants, Mason County Public Service District, Sissonville Public Service District and South Putnam Public Service District, respectively, filed their answers to said complaint. By order entered December 7, 1982, the Commission set t.his matter for hearing to be held in the Commission's Hearing Room at the Capitol in the City of Charleston on Wednesday., January..26,. 1983, at 9:30 a.m., EST. By letter filed with the Commission January. on, 5, -1983, Ralph W. Eassett, Jr., attorney for 'South Putnarn Public Service District, moved..

2 - i,..,, ".: ~, ',. )I.., ~,~.~... that the January 26, 1983 hearing be cancelled and that the hearing be reset to another date. Reasons stated for the requested continuance was the unavailability of the District's General Manager to testify at the January 26, 1983 hearing. By order issued January 12, 1983, the Hearing Examiner granted t,he aforesaid motion for a continuance of the January 26, 1983 bearing, and continued the hearing in this matter generally to a date later to be The January 12, 1983 Procedural Order further stated that the complaint, as filed, was based upon an error of law, whereby West Virginia 7 Code - Chapter 16-13A-7 has been amended by-the Legislature, effective March 12, 1982, and whereby the statutory dollar amount which Ilrequires the inviting of bids is $5,000. -The pleading filed by the IIComplainants cited the statutory dollar. amount of $2,000. Said order /I therefore required that the Comilainants fjlle an amended complaint properly setting forth the charges arrd allegations brought against,the Defendants, or in the alternative, file a motion for withdrawal of said complaint. Said order further sta.ted,that,.pursua,nt to Rule 8 (c) of the Commission's Rules of Practice and Procedure, _1_ said amended complaint should include alleged specific occurrences' wherein procedures required by West Virginia Code $16-13A-7 have not been followed by the Defendants. The Defendants were ordered to make answer to the amended complaint in compliance with the Commission's Rules and Regulations., - By order issued January 17, 1983, the Hearing Examiner reset the matters herein for hearing to be held in the Commission's Hearing Room at the Capitol in the City of Charleston on Wednesday, February 16, 1983, at 9:30 a.m., EST. Said order further required that the Defendants file answer to the amended complaint either prior to or at the February 16, 1983 hearing. On January 24, 1983, the Complainants filed an amended complaint in this proceeding. Said complaint alleges that: I. '- - The defendants have entered into contracts to construct sewage treatment facilities for their operation and, in the process of executing these contracts, the defendants are themselves performing work incident to the completion of the contracts which have been awarded by the defendants which exceed the amount of $5, and which includes, but is not limited to, the laying of sewer pipe, which is in violation of the statute which - requires any work performed by the entity in the amount of $5, should be let for bid..- ""..".". -2-

3 They are performing construction work which involves the expenditure by the district of more than $5,000.00, and said construc.tion work is being done without submitting said work to bid provided'under as Chapter 16, Article 13A, Section 7, of the Code of West Virginia, 1931, as amended. The performance of this work by the defendants is a violation of the statutes of the State of West Virginia. The complainants therefore pray that the said defendants be restrained and stopped from performing this work and be required to answer the charges hereinabove set out, and that, after the investigation, an order may be made commanding the said defendants to cease and desist from the violation of the law aforesaid, and for such other and further order as.the Public Service Commission of West Virginia may deem necessary, reasonable and just in the premises. On February 21, 1983, February 2, 1983, and March 18, 1983, South Putnam Public Service District, Mason County Public Service District, and Sissonville Public Service District, respectively, filed their answers to the amended complaint. By motion filed January 26, 1983, W. T. Brotherton, Jr., attorney for the Complainants, moved for a continuance of the February 16, 1983 hearing. By order issued February 1, 1983, the Hearing Examiner granted the motion for a continuance of the February 16, 1983 hearing and reset the matters involved herein for hearing to be held in the Commission' Hearing Room at the Capitol in the City. of Charleston on Monday, March 21, 1983, at 9:30 a.m., EST. The March 21, 1983 hearing was held as scheduled, Counsel appearing on behalf of the Comp1ainants:was William T.,. Brotherton,, ~. Jr., Esq. Also appearing on behalf of the Complainants were 'Nick Ciccarello, Executive Secretary, West Virginia Utility Contr,actors Association, and Floyd Sayer, Executive Secretary, Contractors Association of West Virginia. Appearing on behalf of Mason County Public Service District was Ronald Stein, Esq. Appearing on beha1.f of Sissonville Public Service District was John Charnock, Esq. Counsel appearing on behalf of South Putnam Public Service District was Ralph W. Bassett, Jr., Esq. Also appearing on behalf of South Putnam PSD was Fred Stottlemyer, the District's General Manager. Appearing on behalf of the Commission's Staff were Mark Keffer, Esq., Legal Division, and Tom McKitrick, Engineering Division. Testimony was given by one witness and the Commission's Staff placed one exhibit into evidence. Forty-five pages of testimony were recorded.

4 The Hearing Examiner left submittal of post-hearing legal briefs to the election of the parties. All partiesi however, elected noto- submit post-hearing briefs of argument. (Tr., p. 44). At the conclusion of the hearing the matters herein were submitted for a Hearing Examine Decision and Order. DISCUSSION OF THE EVIDENCE A prehearing conference, mediated by Mark Keffer, Legal Division, was undertaken immediately prior to the March,21, 1983 hearing on the record. As a result of said prehearing.conference, the parties have stipulated that two particular statutes govern the legal issues presented in this case: West Virginia Code A-7 and West Virglinia Code $ (House Bill 1709, passed March 3, 1983). (Tr., pp. 6, 7). Addi- tionally, the parties have stipulated the facts as to the manner in w the Districts have executed contracts and carried out additions to their respective systems. Those stipulated facts are as presented and dis- cussed by the respective counsel of the Defendant Districts. (Brotherton Tr., pp. 8-10, 27, 28). Mason County PSD, having built its water distribution system with Farmers Home Administration assistance and money, was confronted with various communities coming to the District and asking for water servic The District thereupon found itself in a position of inability to finance the requested additions to its system. Thereafter, with the guarantee of the County Commission behind it, the District borrowed from local banks for the purposes of materials for use in extension construction. Since October, 1982, the District has undertaken what it considers 15 separate and distinct extension projects which have occurred at different times and in different areas of the County. Of those projects (extensions) the largest was a three mile extension rendering service to 23 families, with the smallest extension serving only two families. In all 15 projects the family groups came to the District and agreed to provide all (volunteer) labor necessary to extend water service to them. (Stein-Tr., pp 11-14). The District acquires no financial liability for the labor. (Stein-Tr., p. 27). Additionally, Mason County PSD has had several requests for exten- I sions that were not undertaken because the communities and/or families 11 PUBLIC OMMISSION -4-

5 were unable to provide the labor or materials. (Stein-Tr. p. 13). All of the aforesaid work was according to Mason County PSD specifications and, when completed, the extensions were dedicated to Mason County Public Service District. (Stein-Tr., pp. 14, 15). While the total expenditures by the District for materials are in excess of $5,000, it is the District's position that each of the afore- said extensions are individual projects, as opposed to the initial con- struction of the system, which was funded FHA, by and which is recognized by the District as a single construction project. (Stein-Tr., pp. 12, 13). Sissonville PSD provides extensions of water service to the public under what it calls its sweat-equity program. The particular project of concern is the Martins Branch/Pioneer Lane Association project, which is to both extend service to 70 families and provide improved service to 50 other families. Sissonville PSD proposed the aforesaid extension project to the Kanawha County Regional Development Authority in September, 1982, at a projected cost of $91,000. Of that amount, it was estimated that labor would total $47,000, with the remaining cos't. attributable to materials ntal and of equipment.. ) The Kanawha County Commis-sionccontributed revenue sharing funds to the aforesaid project and the Martins Branch/Pioneer Lane Association contributed approximately $23:,000 to the project. Through the use'of funds cont.ributed by persons to~,receive service, the aforesaid County Commission graht,-and the- use of temporary employees of the District, the District undertook construction of the aforesaid project. Acquisition of materials and rental of equipment were on the basis of bid solicitation. At the time of the hearing in this matter, project completion of three to four weeks was anticipated. (Charnock- Tr., pp , 26). South Putnam Public Service District is involved in ongoing con- struction of both water system and sewer system extensions in several service areas, with a particular project of concern being that cf the Briarwood Sewer Extension. The District solicits bids in purchase of materials and utilizes its own full-time employees for assistance in construction of the

6 L. D.. * project. Upon completion of the aforesaid project, the District expects its employment to be reduced from 25 to 20 persons. Material costs for the Briarwood sewer extension will total approx mately $15,000, with associated payroll costs of $10,000 that will be allocated to the project. (Stottlemyer-Tr., pp ; Bassett-Tr., pp. 26, 27). by counsel, argued that there is a legitimate reason for $5,000 the bid requirement of West Virginia 7 Code A-7, that being that volunteer free labor provides public service districts with no recourse should something go wrong with facilities following completion of the con- struction phase of a project. On the other hand, it is argued that when (engineering firm) are both accountable for work provided. Also cited are alleged benefits of the "adversary type of inspection" which results personnel inspecting either their own work or of that the District's volunteers. S16-13A-7, all projects whose combined labor' and material costs are $5,000 or greater must be subject to the solicitation of bids. The Defendant Public Service Districts argue that their conduct performance in construction of their respective projects is lawful under scrutiny of West Virginia Code s16-13a-7 and recently enacted House Bil COMMENTARY ON THE EVIDENCE, DISCUSSION OF APPLICABLE LAW AND ULTIMATE FINDINGS The Public Service Commission is grante,d.jurisdiction and author to investigate the conduct and practices of. public utilities which are alleged to be contrary to State Law. - We'st Virginia Code_ states "The commission is hereby given power to investigate all rates, methods and practices of public utilities subject to the provisions of this chapter: to~require them to conform to the laws of this State and.to all.~rules, regulations and orders of the commission not contrary to law;...

7 I_ While the.aforesaid statute grants the Commission power and authority to require public utilities to conform to,the of laws the state, it, does not, however, direct the Commission to undertake enforcement against public utilities of all State statutes which may touch upon a public /I utility. Wes't Virginia Code $24-4-6, which speaks to a complainant's right of recourse, doe so only pursuant to violations of Chapter 24 of the Code : "Any person, firm, association of persons, corporation, municipality or county, complaining of anything done or omitted to be done by any public utility subject to this chapter, in contravention of the provisions thereof, or any duty owing by it under the provisions of this chapter, may present to the commission a petition which shall succinctly state all the facts. 'I 'Similarly, Rule 6(b)l, of the Commission's - Rules of Practice and IIProcedure - states that: "Any person, firm, association or persons, public officer, public or private corporation, municipality or county may complain to the commission by petition substantially in the form hereinafter prescribed (see Form No, 1) of anything done or admitted to be done by any public utility in violation of any of the Public Service Comrriission law of West Virginia. 'I (emphasis added) Thus, Chapter 24 of the Code. - and the Commission's Rules of Practice and Procedure limit Commission jurisdiction over Complainants' causes of action to violations of Chapter 24 of the West Virginia Code. While Chapter 24 additionally empowers the Public Service Commission re- to quire public utilities to conform to other laws of the State, the aforesaid Rule and statutes are not in conflict. Read together, the afore- said statutes authorize the Commission to fulfill its public service regulatory responsibilities under Chapter 24 through enforcement of State law, where violations thereof are found contrary to the Chapter 24 public interest. With the public utility regulatory responsi.bilities of the Commis- sion in mind (Chapter 24), this decision and order,will recognize the standing of the Complainants and address the alleged statutory violation only in light of how such violations, if any, are indica'tive of the Defendants' violation of West Virginia Code Chapter 24 and the Defen- dants' failure thereunder to fulfill their public service obligation... West Virginia Code S16-13A-7-Acquisition and Operation of District Properties, states that:

8 n "The board of such districts shall have the supervision and control of all public service properties acquired.or constructed by the district and shall have power, it and shall be its duty, to maintain, operate, extend and improve the same. All contracts involving the expenditure by the district of more than $5,000 for construction work or for the purchase of equipment and improvements, extensions or replacements, shall be entered into only after notice inviting bids shall have been published as a Class I legal advertisement in compliance with the provisions of Article 3...'I (As amended 1982). Recently enacted House Bill 1709 (passed March 3, 1983; effective 30 days from passage) and found at West Virginia , Code entitled 'Bidding required; government construction contracts go to to qualified responsible bidder: exceptions.", is the second statutory section cited 3y the parties as applicable to this dispute. Due to the broad exclu- sions from its coverage, recitation the'entire of statute is necessary:.. "As used in this section, 'the State- and its subdivisions' means the State of West Virginia, every political subdivision thereof, every administrative entity that includes such a subdivision, all municipalities and all county boards of education. The State and its subdivisions shall except as- provided in this section solicit competitive bids for every construction project exceeding twenty-five 'thousand- dollars in.tota1 cost. Following the solicitation of such bids, the construction contract shall.be awarded to the lowest qualified responsible bidder, who 'shall furnish a.sufficient performance and payment bond: Provided, that the State and its subdivisions may reject all bids and solicit new bids on said project. Nothing in this section shall apply'to.work performed on construction or repair projects by^ regular full-time employees of the State or its subdivisions, nor shall anything in this section prevent students enrolled in vocational educational.schools from being utilized in construction or repair projects when such is use a part of the students training program. Nothing herein shall apply to emergency repairs to building components and systems. For the purpose of this paragraph, emergency repairs means repairs that if not made immediately will seriously impair the use of such building components and systems, or cause danger to those persons using such building.componenets and systems. Nothing herein shall apply to any situation where the State or a subdivision thereof shall come to an agreement with volunteers, or a volunteer group, whereby the governmental body will provide construction or repair materials[,] architectural, engineering, technical or any other professional services and the volunteers will provide the necessary labor without charge~to, or liability upon, the governmental body. (1983, c.35).'i The central issue which arises through alleged violations of the aforesaid statutes is the Districts' use of both volunteer labor and 3mployees on the payroll of~the Districts for 'the purpose of undertaking

9 . construction of public utility system line extensions.. The Complainants have made no showing, whatsoever, that such practices are. contrary to the public utility obligation and thereby contrary to the provisions of Chapter 24. of the West Virginia Code. No pr0pk.r.~ and substantiated evidence of such was presented. Instead, the Complainants have relied upon the facts, as presented by the Defendant Districts, which, if anything, would support a finding that the Districts' construction. activities are in the public interest The complainants' argument of possi-ble inferior construction and improper inspection practices, through the Defendants' of use volunteer labor and/or their own employees,.is totally ansupported by the record, and at best i s a subjective point of argument. There is no evidence of record that the Defendants' construction practices have at any time resulted in construction of facilities and distribution systems of inferior quality, and upon which the Hearing Examiner could make a finding of either unreasonableness or a violation of the Defendants' public service duties. (See West Virginia Code S which grants Commission authority to establish reasonable practices). The burden in these proceedings is upon the Complainants to make such a showing by preponderance of the evidence, in which they have failed. Closely related is the fact that the Complainants have not pre" sented any evidence that the Defendants, through their bidding of material purchases, have failed to solicit bids on individual material purchase contracts, and which through higher than necessary purchase costs could be found contrary to the public interest obligation of Wes Virg.inia Code Chapter 24. " In summary, the Complainants' statutory right of complaint with the Commission is limited to alleged violations of the Public Service Commission law. (West Virginia Code ; Rule 6(b)l of the Commis- sion's Rules of Practice and Procedure). The Public Service Commission is not vested by law with responsibility to prosecute all public utilities' violations of State laws. It is only when public utility violations of State law touch upon the West -.- Virginia Chapter Code 24 public interest and public utility obligation that the.commission should undertake enforcement and prosecution of law external of Chapter 24...

10 The Complainants have presented no evidence of Chapter 24 violation by the Defendant Public Service Districts and the decision and order her therefore, does not reach the merits of the Defendants' compliance with West Virginia Code S16-13A-7 and CONCLUSIONS OF - LAW The Hearing Examiner is of the opinion and finds that: 1. The Complainant Assocaitions' right of complaint before the Commission is limited to that of alleged violations of the Public Service Commission law. (West Virginia Code ; Rule 6(b)l of the Commission's Rules 'of Practice and Proc'edure). 2. The Public Service Commission's jurisdiction and statutory law enforcement responsibility is that whereby alleged violation of State Law includes alleged violation of a public utility's West Virgi Code Chapter 24 public service obligation. The Commission may there- fore, through the powers conveyed by West Virginia.Code , fulfill its Chapter 24 regulatory responsibility. 3. The Complainants have failed to establish by a preponderance of the evidence that the construction practices of the Defendant Public Service Districts are either unreasonable, contrary to the public interest, or in violation of West Virqinia Code Chapter 24. ORDER IT IS, THEREFORE, ORDERED that: 1. The complaint of West Virginia Utility Cantractors Association,~,.. and Contractors Association of West Virginia, filed with the Commission on November 19, 1982, against Mason County Public Service District, Sissonville Public Service Dis.trict, and South..Putnam Public Service District, be, and it hereby is, dismissed and stricken from the Commis- sion's docket of open cases. The Executive Secretary is hereby ordered to serve a of copy this order upon the Commission by hand delivery, and upon all parties of record by United States Certified Mail, return receipt requested. Leave is hereby granted to the parties to file written excep- tions supported by a brief with the Executive Secretary of the Commissio:..

11 uithin fifteen (15) days of the date this order is mailed. If excep- tions are filed, the parties filing exceptions shall certify to the Executive Secretary that all parties of record have been served said sxceptions. If no exceptions are so filed this order shall become the xder of the Commission, without further action or order, five (5) days, following the expiration of the aforesaid fifteen (15) d.ay time period, unless it is ordered stayed or postponed by the Commission. Any party may request waiver of the right to file exceptions to a Hearing Examiner's Order by filing an appropriate petition in uriting with the Secretary. No such waiver will be effective until spproved by order of the Commission, nor shall any such waiver operate to make any Hearing Examiner's Order or Decision t.he order of the Zommission sooner than five (5) days after approval of such waiver by the Commission. Charles D. Perfater Hearing Examiner